Why Microsoft is splitting up Windows in its latest reorganization

The word is out: Microsoft is embarking on yet another reorg, arguably the biggest since Satya Nadella took over as CEO four years ago. In this one, Windows is going to be cleaved into a couple of parts — all in the name of making Microsoft over to focus on its high-growth businesses.

Microsoft is hoping it can do with Windows what it did with Office. The company managed to turn its individual on-premises Office products into a cloud bundle with Office 365 — which is growing even faster than Microsoft itself expected. (Microsoft officials have predicted the company could have two-thirds of its Office users in the cloud by its fiscal 2019.) Now, it’s trying to do something similar for Windows with Microsoft 365: Create a bundle of cloud services anchored by Windows 10 that will provide the company with a recurring revenue stream.

With today’s moves, Microsoft is not throwing in the towel on Windows or its Surface line.

Microsoft is moving some of Myerson’s other former lieutenants to Guthrie’s Cloud AI division. Jason Zander, who is being promoted to executive vice president under Guthrie, will lead the newly combined Azure and Windows platform teams. The thinking is by bringing Windows client, server, and cloud all together, Microsoft will be able to better build a common infrastructure and application model across all flavors of Windows. Roanne Sones, who heads up technical engagement with OEMs and silicon vendors, will also be part of Zander’s team.

Technical Fellow Alex Kipman gets a new role as part of today’s reorganization, as well. He will continue to work on the HoloLens while also leading a new team called AI Perception Mixed Reality Services, which will be part of Guthrie’s organization. The new team will oversee all Microsoft’s speech, vision, mixed reality, and other perception capabilities, and it will continue to build first-party experiences and cloud services for third parties on Azure. Kipman and team will work closely with Harry Shum on all things AI related.

Outside of Windows and Devices, there are a few other noteworthy org changes revealed today, especially around AI. While Kipman is taking on oversight of “perception”-related AI services, the overall AI Platform, Tools and Cognition Services, including Azure ML, Cognitive Services, and the Bot Framework, will be folded into a new “AI Platform, Tools and Cognitive Services” team under Eric Boyd, as part of Guthrie’s organization. Cloud AI Platform Corporate VP Joseph Sirosh will join this new group, as well. (These products/services were, up until now, part of Shum’s AI + Research org.)

I’m hearing from my contacts there are not going to be layoffs associated with today’s reorg. The moves today also will not change how Microsoft reports its financials.